In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-1376
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
ANTHONY CANTY,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 04 CR 38—John W. Darrah, Judge.
____________
ARGUED JANUARY 8, 2007—DECIDED AUGUST 28, 2007
____________
Before EASTERBROOK, Chief Judge, and ROVNER and
WOOD, Circuit Judges.
WOOD, Circuit Judge. Anthony Canty was caught
with guns, drugs, and counterfeit money in his apart-
ment. When questioned by the police about the money,
Canty did not deny that it was counterfeit (a wise choice,
the police having found the phony money sitting in a
printer tray in Canty’s apartment, on 8.5 x 11 inch pieces
of paper, with genuine bills taped to the screen of a nearby
scanner). Instead, he explained that he was printing
the money to give the police for their use as “flash money”
in undercover drug operations. Canty was not just feel-
ing philanthropic; he later told the grand jury that he
was hoping to win over the good graces of the police for
2 No. 06-1376
consideration in pending drug charges Canty was facing.
Canty was tried for counterfeiting money, in violation of 18
U.S.C. § 471, as well as for numerous drug and gun
charges not relevant to this appeal. At trial, when Canty
took the stand in his own defense, the district court
precluded him from testifying about his motivation for
printing the money. The court reasoned that Canty’s
story amounted to a public authority defense, which
Canty was trying to present without giving the govern-
ment the advance notice required by FED. R. CRIM. P. 12.3.
Canty was convicted on all charges and sentenced to 360
months’ imprisonment.
Canty raises two challenges to his counterfeiting convic-
tion on appeal. First, he argues that the district court
violated his constitutional right to testify by limiting his
testimony. He contends that Rule 12.3 was not applicable,
because he was not raising a public authority defense. In
his view, his explanation was offered solely to prove that
he lacked any intent to defraud, a required element under
18 U.S.C. § 471. Moreover, he argues, even if Rule 12.3
is relevant, the rule may not be enforced by restricting
a defendant’s testimony. The government concedes that
the court below erred, but it argues that the error was
harmless. Canty also asserts that the evidence was
insufficient to convict him under the counterfeiting
statute. We agree with Canty that the district judge
improperly limited his testimony and that the error was
not harmless. Because we vacate his conviction and
remand for a new trial on the counterfeiting charge, we
do not reach the sufficiency of the evidence claim.
I
On January 11, 2004, Canty was stopped in the hall-
way of his apartment building by two police officers who
had received a tip that drugs were being sold at that
No. 06-1376 3
location. Because Canty appeared to be covering up
something in the front part of his pants, one of the officers
patted Canty down and felt what he believed to be a
handgun. Canty then fled down the hall and into his
apartment, where he locked the door. The officers, by then
joined by four more officers, broke down Canty’s door
and entered his apartment where they saw Canty trying
to stash three handguns inside the speaker area of his
television set. They promptly arrested him and proceeded
to search the rest of the apartment. The search turned up
a shoebox containing marijuana, crack cocaine, a cocaine
and heroin mixture, and $1,806 in cash. Most relevant to
this appeal, the officers also found substantial evidence
that Canty was producing counterfeit money. They seized
a Hewlett Packard color ink jet combination printer/
scanner/copier. Two genuine bills—of $50 and $100
denominations—were taped to the scanner screen and
the printer tray contained a stack of 8.5 x 11 inch sheets
of paper on which were printed reproductions of the
genuine bills in various stages of production. Only the
front or the back of a particular dollar bill appeared on
some of the sheets of paper; others had double-sided
copies containing the front side of a bill on one side and
the back side of the bill on the other.
Shortly after his arrest, Canty agreed to be interviewed
by Secret Service Special Agent Bradley Boydston. Canty
admitted to Boydston that he was in fact manufacturing
the money and that he intended to produce $30,000 worth
of counterfeit bills. His excuse for this questionable
behavior was that he was producing the money in an effort
to assist the Chicago Police Department (“CPD”) in
attempting to purchase drugs from a drug supplier that
they were trying to arrest. Canty told Boydston that he
was helping to generate “flash” money for the police—cash
that a potential drug buyer (or undercover police officer)
would show (that is, “flash”) to a potential seller in order
demonstrate to the seller that the buyer had sufficient
4 No. 06-1376
funds to close the deal. Flash money is generally not
exchanged in a drug bust operation; typically, the police
swoop in and make an arrest once the presence of drugs
is confirmed. Canty admitted that no one in the CPD
told him to print the counterfeit money; he decided to do
so “on [his] own.”
On April 13, 2004, Canty appeared before the grand jury.
Regarding the counterfeit money, Canty again admitted
that he was in the process of making counterfeit money
when the police entered his apartment. In response to a
juror’s question about how long Canty had been making
the money, Canty said,
Actually it was something new, and it was pertaining
to the assistance of an officer who I was trying to
assist while I was out in the world. I was—he alluded
that he needed some help in some things and he
couldn’t do it. He did not tell me to do it, but I, you
know, told myself the best thing to do is to get the
money because we were trying to make a buy and
fighting another charge statewise, [sic] sir.
The grand jury was not dissuaded by Canty’s story from
returning an indictment on six counts: three drug charges,
two firearm charges, and one count of manufacturing
counterfeit currency under 18 U.S.C. § 471.
Canty was tried by a jury on February 7, 2005. To
support the counterfeiting charge, the government entered
Canty’s grand jury testimony into evidence, and Boydston
testified about Canty’s post-arrest statements. Before
Canty took the stand in his own defense, the government
moved in limine to preclude Canty from testifying about
his motivation for counterfeiting the money. The gov-
ernment contended that Canty’s explanation—that he
was making the money to give to the police to aid in
their investigation—constituted a public authority de-
fense. Under Rule 12.3 of the Federal Rules of Criminal
Procedure, “If a defendant intends to assert a defense of
No. 06-1376 5
actual or believed exercise of public authority on behalf
of a law enforcement agency or federal intelligence agency
at the time of the alleged offense, the defendant must
so notify an attorney for the government in writing . . .
within the time provided for filing a pretrial motion, or
at any later time the court sets.” FED. R. CRIM. P.
12.3(a)(1). The government argued that it had never
received any such notice, and so Canty’s testimony should
be barred.
Canty responded by denying that he was asserting a
public authority defense. Rather, he claimed, he was
attempting to show simply that he lacked the requisite
intent to defraud under 18 U.S.C. § 471. Canty wanted to
tell the jury that he printed the money to ingratiate
himself with the police for potential favorable consider-
ation in a separate pending drug case, not because the
police had authorized him to do so. The district judge
agreed with the government that Canty was attempting
to advance a public authority defense and that he had
failed to provide the government with the required notice
under Rule 12.3. Accordingly, the court limited Canty’s
testimony on the counterfeiting charge to the following
colloquy with his attorney:
Q: Mr. Canty, with regard to this counterfeit money
that was there in the apartment.
A: Yes, sir.
Q: Were you intending to try to pass that counterfeit
money at stores and banks and so on?
A: No, sir.
Q: And were you in fact making that money in hopes
of ingratiating yourself with some police officer in
connection with an investigation?
A: Absolutely.
As noted, Canty was convicted on all six charges.
6 No. 06-1376
Canty moved in the district court for a new trial on
various grounds, including that the district court improp-
erly limited his testimony on the counterfeiting charge.
The district judge denied the motion, again citing Canty’s
failure to provide notice of his public authority de-
fense under Rule 12.3.
II
The government concedes, and we agree with it, that
the district court erred by restricting Canty’s testimony
on the counterfeiting charge at trial. As the defense has
correctly argued throughout this litigation, Canty’s
proposed testimony did not implicate the public author-
ity defense, and so Rule 12.3 should never have been
consulted in the first place. The public authority defense
excuses criminal behavior when a defendant was exer-
cising “actual or believed . . . public authority on behalf
of a law enforcement agency or federal intelligence
agency at the time of the alleged offense.” FED. R. CRIM. P.
12.3(a)(1). It is premised on the notion that a public offi-
cial somehow authorized otherwise illegal activity.
Here, Canty consistently and affirmatively denied that
any official authorized his counterfeiting activity. His
point was that he lacked the requisite intent to defraud
required by 18 U.S.C. § 471, since (acting on his own
initiative) he was creating the money to give to the police
to use for their own investigatory purposes. In his grand
jury testimony, Canty stated that the officer he was
assisting “did not tell [him] to do it,” that Canty “told
[himself] the best thing to do is to get the money because
we were trying to make a buy and fighting another charge
statewise. . . .” Officer Boydston testified at trial that
Canty said from the beginning that nobody told him to
print the money, that he “did it on [his] own.” Defense
counsel tried to explain to the district judge that Canty
No. 06-1376 7
was “not claiming the police authorized him to make the
money. In fact, what he told [Officer Boydston] was just
the opposite, that he was doing it on his own. The officer
said that they didn’t have any money to use, so [Canty]
figured he would make some money.” Canty’s assertion
that he counterfeited money without any intent to defraud
someone with it is not at all the same as a claim that he
believed he had official permission to make the money.
Only the latter is a “public authority” defense that triggers
the notice provision of Rule 12.3. Since Canty never
attempted to advance a public authority defense, Rule
12.3 never should have come into play.
Even if Rule 12.3 had some residual relevance here, the
district court’s ruling would still have been erroneous.
Rule 12.3(c) states, “If a party fails to comply with this
rule, the court may exclude the testimony of any undis-
closed witness regarding the public-authority defense. This
rule does not limit the defendant’s right to testify.” FED. R.
CRIM. P. 12.3(c) (emphasis added); see also MOORE’S FED-
ERAL PRACTICE § 612.3.04 (“If a party fails to comply with
the requirements of Rule 12.3, the court may exclude the
testimony of any undisclosed witness regarding the
public-authority defense. Alternatively, the court can
grant a continuance, order a mistrial, or allow the failure
to comply with the Rule to be used for impeachment
purposes. Because of a concern regarding a defendant’s
constitutional right to testify, one thing the court can-
not do is exclude the defendant’s own testimony.”).
Canty’s reason for wanting to testify was directly re-
lated to the intent element of the counterfeiting statute,
§ 471. To support his claim that he lacked any intent to
defraud, Canty wanted to give the jury a more thorough
and detailed version of events than the minimal colloquy
that the district judge permitted. Since the plain language
of the rule expressly precludes the very sanction the
district court imposed, the district court erred by prohibit-
8 No. 06-1376
ing him from doing so. The only remaining question is
whether the error was harmless. See FED. R. CRIM. P.
52(a).
The government advances two reasons why it believes
the error was harmless. First, it argues that Canty’s
defense does not actually demonstrate a lack of intent to
defraud. Instead, it merely shows that he intended to
defraud whichever drug dealer was the ultimate target
of the police. The government believes that this type of
transferred intent is sufficient to satisfy the intent re-
quirement of 18 U.S.C. § 471. Second, the government
maintains that Canty’s defense was sufficiently presented
to the jury through other evidence and that his proposed
testimony would have been cumulative.
We disagree with the government that Canty’s stated
motivation for printing the money, if believed by a jury,
inevitably shows an intent to defraud someone. 18 U.S.C.
§ 471 states, “Whoever, with intent to defraud, falsely
makes, forges, counterfeits, or alters any obligation or
other security of the United States, shall be fined under
this title or imprisoned not more than 20 years, or both.”
The term “defraud” is commonly defined as “caus[ing]
injury or loss to (a person) by deceit.” BLACK’S LAW DIC-
TIONARY (8th ed. 2004). Canty’s plan, an effort to curry
favor with the police, was to give the money to the police
for their own use of it as “flash” money in undercover drug
busts. The government is correct that Canty cannot escape
criminal liability merely because the ultimate victim
happens to be a drug dealer or because a third party (that
is, the police) was to conduct the actual transaction. See
United States v. Wolfe, 307 F.2d 798, 800 (7th Cir. 1962)
(finding the defendant had an intent to defraud when he
knowingly passed counterfeit bills to a third party whom
the defendant knew would spend the money).
We would have a different case if Canty had intended
to use the money to buy drugs or had encouraged the
No. 06-1376 9
police to do so. But his idea was different. He was manu-
facturing the phony bills (or so he wanted to tell the jury)
just so that they could be “flashed,” which we understand
to mean simply displayed in a manner that establishes
some legitimacy as a drug buyer, as opposed to ex-
changed for value. Neither the money nor the drugs were
ever intended to change hands. Much like the notion
in contract and other areas of law that “puffing” about
the quality of one’s wares does not give rise to actionable
fraud, see, e.g., Williams v. Aztar Indiana Gaming Corp.,
351 F.3d 294, 299 (7th Cir. 2003) (holding that “sales
puffery” cannot constitute mail fraud to support RICO
claim); Wilson v. American Trans Air, Inc., 874 F.2d 386,
391 (7th Cir. 1989), the act of promoting one’s self as a
wealthy or seriously interested buyer cannot be considered
by itself to cause injury or loss by deceit. Unless goods are
actually exchanged for the false money, flashing a large
roll of cash is just puffery by the buyer, as opposed to the
seller. The act of flashing play money in order to appear
more affluent and therefore be taken more seriously as
a buyer is no more fraudulent than, for example, wearing
a fake Rolex watch for the same reason. It may tend to
exaggerate one’s financial worth or inspire interest in
the sale, but it is not fraud.
Nor, on this record, can we characterize Canty’s pro-
posed testimony as cumulative. The government main-
tains that Canty’s story was presented to the jury three
different times; first, through Canty’s grand jury testi-
mony, which was introduced at trial; second, through
Agent Boydston’s recitation of Canty’s post-arrest state-
ment, and third, through the limited testimony that Canty
was permitted on the subject. But a closer look at these
three sources shows that they are not so conclusive. To
begin with, the grand jury testimony and post-arrest
statement, which were presented as part of the govern-
ment’s case-in-chief, in fact created some confusion as to
10 No. 06-1376
what Canty specifically intended. While Boydston relayed
the fact that Canty intended to make “flash money,” Canty
stated to the grand jury that he printed the money be-
cause “we were trying to make a buy. . . .” Thus, the
government’s evidence presented a muddled picture on
Canty’s true motivation. What paltry testimony the
district court did allow Canty to present did little to clarify
his story. The court permitted Canty to answer three
leading questions that established solely that Canty was
hoping to ingratiate himself with the police by making the
money and that he had no intention of “pass[ing] the
counterfeit money at stores and banks. . . .” He was not
able to say anything about flash money.
Whether Canty was properly convicted under § 471 turns
entirely on the question whether he had a specific intent
to defraud. We conclude that his version of the events,
while certainly nothing that a jury would be compelled
to believe, was not so farfetched that the district court
could exclude it from their consideration. Nothing else
served as an adequate substitute for Canty’s proposed
testimony. We therefore conclude that the district
court’s error was not harmless.
III
We note, finally, that Canty has confined his appeal to
the conviction on the charge of violating 18 U.S.C. § 471.
Nothing we say here should be understood as disturbing
in any way his convictions on the remaining counts of
the indictment. We VACATE the judgment of conviction on
the counterfeiting charge and REMAND for a new trial on
that count.
No. 06-1376 11
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—8-28-07